Warren Buffett Is Finally Buying: Berkshire’s $365B Cash Shift Explained

Good morning. This is Mike Milligan, Certified Financial Planner. And this is the One of a Kind Financial Show Daily for Monday, August 10th, coming to you today from San Juan, Puerto Rico. If you were with me last week, you heard 5 prerecorded shows taped on Sunday, August 2nd, walking through what to look for in the market and one pillar of the One of a Kind Financial Plan each day. Turns out my past self got some things right, got some things wrong. And my travel plans for the week did not survive contact with reality either. I'll tell you about that too. Educate, coach, plan. Never miss a moment. Let's go.

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Let me start this Monday with what actually happened last week, because it turned out to be the best week for the US stock market since April. The S&P 500 closed Friday at a record 7,757, up 3.6% for the week. The NASDAQ 26,690, up 5.2% for the week. And the Dow 54,060, up nearly 3% for the week. And then we get to the small caps. Russell 2000 up 3.5%. Do you hear a recurring theme here? The S&P closed above 7,700 for the first time in history midweek. And that's the best weekly performance for those indexes since the week of April 17th. So when I taped this last Sunday and warned you the biggest risk was Friday's job report, I got the setup half right. The report itself was terrible and the market rallied on it anyway. Friday morning, the Bureau of Labor Statistics showed that July nonfarm payroll came in at negative 23,000 jobs. That's not soft. That's not disappointing. That's negative, folks. The consensus was for a gain of about 83,000 new jobs. That is a miss of over 100,000 jobs. And the revisions to May and June took another 103,000 jobs off the prior 2 months. The 3-month average jobs— job creation now sits at 20,000 per month, down from 77,000 in June. Unemployment ticked lower to 4.1%, but that was because 264,000 people left the labor force entirely. The participation rate fell to 61.4%. That's the lowest in more than 5 years. The market took that report and rallied. Why? Because ahead of the print, future traders were pricing in a 55% chance the Fed hikes at its September meeting. After the print of the jobs report, that flipped, and the majority of traders now expect the Fed to hold rates at 3.5% to 3.75%. Weak jobs equals no rate hike equals stock up. The bad news is good news mechanics returned. Under the hood, chip stocks came roaring back. The iShares Semiconductor ETF finished the week up more than 7%. Nvidia gained over 10%, its best weekly gain in more than a year after SpaceX said Nvidia would be its exclusive AI build-out partner, SpaceX itself. In its first quarterly report as a public company, rallied about 19% on the week. Software rebounded. Airbnb closed up over 17% Friday on a Q2 beat and raised full-year guidance. Coherent gained 47% on the week on reports of pending US restrictions on Chinese data center components, Boeing added about 7%. The other side, energy stocks sold off. WTI crude fell more than 7% for the week. Chevron lost about 5%, EOG down 8%, Diamondback down 7%, all while precious metals ran. Gold was up 6.6% for the week, silver up nearly 12%, its best weekly performance since February. This is the week I did not fully see coming. Weak data, strong tape, sector rotation into tech and metals and out of energy.

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Now here's the story that broke over the weekend and did not get the coverage it deserved yet. Greg Abel, in his second quarter as CEO of Berkshire Hathaway— yes, Warren Buffett— That company Warren Buffett ran forever, just put a meaningful chunk of that famous cash pile to work. Berkshire's cash declined from a record $397.4 billion, with a B, on March 31st to $365 billion as of June 30th. That's a drop of 8%. Well, where did that cash go? Because that's a meaningful cash decline. That's the first meaningful cash decline at Berkshire since Early 2022? Well, 2 moves inside that number. Berkshire repurchased $4.5 billion of its own shares in the second quarter. This is the largest buyback in nearly 2 years. The prior quarter was only $235 million, almost 5 times what they did before. And before that, Berkshire hadn't bought back shares since 2024. On top of the buyback, Berkshire was a net buyer of equities for the first time in 14 consecutive quarters. Net equity holdings went up roughly $20 billion, which includes $10 billion in Alphabet that was announced in June. And based on the shares count data from July 29th, analysts estimate Berkshire bought roughly another $3.4 billion of its own stock in July alone. Educational take, folks. For years, the market watched Warren Buffett sit on the largest corporate cash pile in history and read that as the master doesn't see anything worth buying. Just remember a few weeks ago here on the podcast, we reported that Warren Buffett's interview with Becky Quick from CNBC showed him that he saw the market as a gamble. Well, Greg Abel just changed that signal. He's deploying capital. He is buying his own company. He bought Alphabet. Nothing about this is a recommendation, folks, but when the corporation with the most cash and arguably the most patient decision-making process in American capitalism starts spending, that's a signal every household should at least ask a question about. The question for you and me is not, should I buy what Berkshire is buying? The question is, when the biggest cash holder in the country changes his mind, what is my plan built to do? That is the plain question. That is why we build the one-of-a-kind financial plan.

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Personal update. I taped last week's 5 episodes on Sunday, August 2nd, before my travel to Boston and what was supposed to be through Raleigh before coming back to Puerto Rico last week. And I met with some of the biggest names in the retirement business when I was in Boston. I met with members of the investment director, the head of indexes for Annexus. I met with the CEO of LumaCells. I met with other top producers. I had dinner with a couple of key partners from Simplicity and something new that we're going to be bringing out in our own firm on the technology side. But I got Boston done. And then a summer cold and a stomach bug hit me at the same time after we were done in Boston, and I canceled my Raleigh leg entirely and flew directly home to San Juan from Boston. So I'm recording this from home instead of a hotel room this weekend, and I'm grateful for it. 2 things that made me thankful. First, I prerecorded last week for a reason. If I had waited to record live, the audience would've gotten nothing, crickets. And so see, that was a plan to prerecord. Second, my body knew what my calendar did not. Sometimes the moment you cannot miss is a moment of rest, and that's what I needed this past weekend. And one more thing, I am only 49 days now away from turning 50 years old. I started that personal countdown of 100 roughly a little over 7 weeks ago. Now, as I finished, here's my commitment. 1 gallon of water a day, I'm going to drink it. I'm going to exercise every day. I'm going to get 10,000 steps and I'm going to get some pesky weight off before that birthday comes. This morning at 6:00 AM, I was at Orangetheory in San Juan, class 1 of heading for my last 50 days. I will update you on this progress. I'm never going to miss a moment because that applies to me and my own body also.

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All right, looking ahead this week, this is an inflation week. Tuesday, August 11th, July NFIB. Small Business Optimism Index in the morning. Wednesday, August 12th, Consumer Price Index. Thursday, August 13th, July PPI, Producer Price Index, and weekly jobless claims. And then Friday, August 15th, July retail sales. There's a couple of earnings this week. Cisco reports Wednesday after the close and Applied Materials Thursday after the close. The setup after last week is fragile in one direction. If CPI comes in cool on Wednesday, this rally likely Keeps going. If CPI comes in hot, we start repricing similar to what happened when Wednesday's Dow crashed a couple weeks ago by 1,153. One data print, that's the risk. So this has been Monday, August 10th. Tomorrow I'll walk you through NFIB and set up CPI Wednesday. And tomorrow I'll also only have 48 days to go till 50. If you're interested in connecting with me, easiest way to do that is to text the word IDEAS, I-D-E-A-S, to 600-700. Or call our office, 757-909-7151. This has been Mike Milligan for the One of a Kind Financial Show Daily. About 50 episodes ago, I said that I'm learning Spanish, and I say that in Spanish in this, that way in the podcast by, I am learning, estoy aprendiendo. But so are you. You are learning also. Educate, coach, plan. Never miss a moment. I'll see you tomorrow. This has been the One of a Kind Financial Show Daily with Mike Milligan. This program is for educational purposes only. It's not a recommendation to buy or sell any specific security. It's my take on what's going on in the market. All market and earnings data is reported by the respective companies, exchanges, and government agencies. Past performance is not indicative of future results. References to Berkshire Hathaway's 2nd quarter activity are based on the company's public disclosures and CNBC reporting. No position is being recommended. I am a licensed— I am an investment advisor representative with Advisory Alpha LLC. Ideas by Mike, doing business as One Oak Financial, is Affiliated entity of Advisory Alpha LLC. Please consult your own licensed financial professional before making any financial decisions. Again, this has been Mike Milligan for the One of a Kind Financial Showdown.

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